Crude Oil Edges Higher as Fewer Americans File Jobless Claims

June 16 (Bloomberg) -- Crude oil edged higher after a
government report showed that fewer Americans filed applications
for unemployment benefit last week.

Futures climbed from the lowest level in almost four months
after the Labor Department said jobless claims fell by 16,000 to
414,000 in the week ended June 11. Oil dropped earlier,
extending yesterday’s 4.6 percent slide, as Greek Prime Minister
George Papandreou sought to win a confidence vote and violence
erupted over budget cuts and austerity measures needed for aid.

“The better-than-expected economic numbers this morning
are helping give the market a pop,” said Carl Larry, director
of energy derivatives and research with Blue Ocean Brokerage LLC
in New York. “Prices fell more than was justified yesterday on
the Greek concerns.”

Crude oil for July delivery rose 14 cents to settle at
$94.95 a barrel on the New York Mercantile Exchange. The
contract fell $4.56 to $94.81 yesterday, the lowest settlement
since Feb. 22. Futures are up 22 percent from a year ago.

Brent oil for August delivery increased $1.01, or 0.9
percent, to end the session at $114.02 a barrel on the London-based ICE Futures Europe exchange.

Economists surveyed by Bloomberg News projected 420,000
filings for unemployment benefits, according to the median
forecast. The number of people on unemployment benefit rolls and
those receiving extended payments decreased last week, the
department said in Washington.

Housing Starts

Work began on 560,000 houses in the U.S. at an annual pace,
up 3.5 percent from the prior month and exceeding the 545,000
median forecast of economists surveyed by Bloomberg News,
figures from the Commerce Department showed today in Washington.
Building permits, a sign of future construction, also increased.

“It’s always good to see a drop in the number of new
jobless claims and a rise in housing starts,” said Peter
Beutel, the president of Cameron Hanover Inc., an energy
advisory company in New Canaan, Connecticut. The employment and
housing outlook remains poor, he said. “We’re a long way from
seeing them be engines of growth in the economy.”

The euro fell for a second day to a three-week low of
$1.4074 after Het Financieele Dagblad, a Dutch newspaper, cited
European Central Bank Governing Council member Nout Wellink as
saying the region’s emergency fund should be doubled.

“There will come a point when the European fiscal crisis
is priced in, but we aren’t there yet” said Katherine Spector,
commodities strategist with CIBC World Markets Corp. in New
York. “The Greeks will probably have to restructure their debt.
At some point the end game will be clear.”

Greek Cabinet

The currency was also dragged lower on concern a
reshuffling of Greek Prime Minister George Papandreou’s cabinet
will lead to a renegotiation of aid terms. A stronger dollar
typically makes commodities less attractive as an investment.

Papandreou is seeking to win a confidence vote as violence
erupted over budget cuts and austerity measures needed for
international aid. German Chancellor Angela Merkel and French
President Nicolas Sarkozy will meet tomorrow in Berlin, with
pressure increasing for the leaders to reach an accord on a
rescue package for Greece.

“Continuing worries about the economy and fallout from the
European debt crisis have put downward pressure on prices,”
said Gene McGillian, an analyst and broker at Tradition Energy
in Stamford, Connecticut. “The loss of Libyan oil production
and the problems in the Middle East will keep us from falling
much lower.”

Libyan Output

Libya won’t be able to raise oil production to pre-conflict
levels of about 1.6 million barrels a day until 2014, according
to the International Energy Agency. Output in the North African
country has fallen to less than 200,000 barrels a day amid the
uprising against leader Muammar Qaddafi, the Paris-based IEA
said today in its Medium Term Oil and Gas Market report.

The Organization of Petroleum Exporting Countries will cut
crude-oil loadings for the first time in seven weeks, according
to tanker-tracker Oil Movements. The group will ship 22.81
million barrels a day in the four weeks to July 2, down 0.7
percent from the period ended June 4, the Halifax, England-based
consultant said in a report today.

OPEC failed to agree on an output target when it met on
June 8. Saudi Arabian Oil Minister Ali Al-Naimi pledged that day
the kingdom would keep markets adequately supplied in the
absence of an accord by the 12-member group.

Oil prices may increase if OPEC fails to bolster production
and inventories decline, the head of the International Energy
Agency said today.

‘Very Tight’ Supplies

Supplies may become “very tight” if OPEC doesn’t increase
production to meet higher demand in July, Executive Director
Nobuo Tanaka said in an interview with Bloomberg Television in
St. Petersburg, Russia. Saudi Arabia is likely to deliver on its
pledge to keep markets adequately supplied, he said.

Oil volume in electronic trading on the Nymex was 594,048
contracts as of 3:10 p.m. in New York. Volume totaled 1.05
million contracts yesterday, 57 percent above the average of the
past three months. Open interest was 1.57 million contracts.